Drug Testing, Intervention, and Trafficking Reduction Within Prisons Act of 1998

Drug Testing, Intervention, and Trafficking Reduction Within Prisons Act of 1998 - Amends the Violent Crime Control and Law Enforcement Act of 1994 to require a State, to be eligible to receive a grant under the Violent Offender Incarceration and Truth-In-Sentencing Grants Program: (1) to provide assurances to the Attorney General that the State has implemented, or will implement within 18 months, policies that provide for the recognition of the rights of crime victims; and (2) by September 1, 1998, to have a program of drug testing and intervention for appropriate categories of convicted offenders during periods of incarceration and criminal justice supervision, with sanctions including denial or revocation of release for a positive drug test, consistent with guidelines issued by the Attorney General.

Allows Program funds to be: (1) applied to the cost of offender drug testing and appropriate intervention programs during periods of incarceration and criminal justice supervision; and (2) used by the States to pay the costs of providing to the Attorney General a baseline study on their prison drug abuse problem.

Requires, beginning in FY 2000: (1) that States receiving Program funds have a system of sanctions and penalties that address drug trafficking within and into correctional facilities under their jurisdiction; and (2) a ten percent reduction in Program funds to a State for each fiscal year for which the Attorney General determines that such State is not in compliance with such requirement.

Amends the Omnibus Crime Control and Safe Streets Act of 1968 to authorize States that demonstrate that they have existing in-prison drug treatment programs that are in compliance with Federal requirements to use funds awarded under provisions regarding residential substance abuse treatment for State prisoners for treatment and sanctions both during incarceration and after release.